Broken Market

It is pretty clear that the HFT boyz have managed to break the stock market. Volume is collapsing – NYSE is down 54% year-over-year for August. Investors are leaving the public market in droves, either to hide in “dark pools” where HFT is excluded, if they are trading in size, or just moving to the sidelines.  A simple suggestion is a speed limit – Themis Trading, which has been a thorn in the side of the HFT Mafia, proposes a 50ms. limit.

Everywhere, different prices kept flickering on the screens. Computers at high-speed trading firms, Mr. Arnuk said, were issuing buy and sell orders and then canceling them almost as fast, testing the market. It can be hell on human brokers. On the tape, the stock’s price was unchanged, but beneath the tape, things were changing all the time.

“They will flicker to see who is not flickering,” Mr. Arnuk said of H.F.T. computers. “The guy who is not flickering is the idiot — the real investor.

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